Getting the measure of asset recovery

The OECD this week released a report measuring how its member countries are performing in their efforts to stem illicit financial flows (IFF). While much attention is likely to focus on the chapters discussing money laundering, tax evasion and bribery -- the main sources of illicit financial flows -- the report features an important discussion of the other side of the equation: how are OECD countries performing in returning illicit financial flows?

Thanks to the efforts of the Stolen Asset Recovery Initiative (StAR), there is data available on the recovery of illicit flows from bribery and corruption. The OECD report previews some of this information, showing that OECD countries have improved their results in terms of freezing assets (increasing from US$1.225 billion in 2006-2009, toUS$1.398 in the shorter period of 2010-June 2012). At the same time the figures demonstrate that there has been little progress on asset returns(from US$276 million in 2006-2009, to US$147 million in 2010-June 2012). Most of the activity in both periods has been in Switzerland, the United Kingdom and the United States -- countries that have made asset recovery a political priority and that have adopted innovative approaches to overcome the barriers involved in the process.

A joint StAR-OECD report to be released early next year will break this data down further. It follows an earlier study, ‘Tracking Asset Recovery Commitments’, which measured OECD country progress in freezing and returning assets between 2006 and 2009. The publication, due out in January 2014, will show how countries are benefiting from the financial returns, the legal avenues that are being used, the good practices that countries have adopted in prioritizing policies on asset recovery, and improvements to the expertise of operational teams working on the issue. In addition to the study, StAR has compiled and published an ‘Asset Recovery Watch database’ showing completed and active asset recovery efforts around the world.

A role for development agencies

Another welcome issue raised in today’s new OECD report is the focus on the involvement of development agencies in tackling illicit financial flows. Given the huge estimates of illicit financial flows and the particularly negative impact on developing countries, it would seem likely that development agencies would be at the forefront of this issue. But with a few exceptions development agencies (and their perspective) are absent from the IFF agenda.

Similarly, StAR has found that they are largely missing from the asset-recovery agenda. Development agencies have given undertakings to fight and recover illicit flows at international OECD forums in Accra in 2008 and Busan in 2011, but they have not translated their commitments into actions. The upcoming StAR-OECD report will highlight good practices and propose ways that development agencies can practically contribute to the asset recovery agenda.

The discussions on illicit financial flows have tended to focus on the crimes that generate the illegal funds. But shining a light on what is happening to recover these illicit flows is important in spurring further action to ensure they are used to benefit those for whom they were intended in the first place.